Our Configure, Price, Quote (CPQ) Solution Study covers one of the six categories presented in our Sales Enablement Best Practices Report. As the name implies, Configure, Price, Quote (CPQ) solutions provide functionality to support complex sales transactions. CPQ systems enable sales teams to custom design or configure a solution for a customer from different product sets, options or piece parts; price the solution appropriately and prepare a quote for the customer in a negotiated sales situation.
We define CPQ as comprising the strategies, processes, technologies and tools that support the organization’s ability to effectively configure products/services from a set of options, price a customized solution based on relevant internal and external factors and provide a digitally generated quote for customer signature and payment.
This study covers the following sections:
- Executive Summary
- What is Configure, Price, Quote?
- Benefits of CPQ
- The CPQ Solutions Landscape
- CPQ Deployment Lifecycle
- Vendor Selection Criteria
- Action Plan
- Analyst Bottom Line
- About the Research Analysts
- Our Solution Study Methodology
- About Demand Metric
There are 8 premium tools & templates linked inside of this solution study:
- CPQ Readiness Assessment
- Sales Enablement Framework
- CPQ Strategy Scorecard
- CPQ Vendors Matrix
- CPQ System RFP Template
- CPQ Vendor Evaluation Matrix
- MarCom Plan Methodology
- CPQ Program Metrics Dashboard
To obtain this document, visit us at http://www.demandmetric.com/register
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Executive Summary
What is Configure, Price, Quote?
Benefits of CPQ
The CPQ Solutions Landscape
CPQ Deployment Lifecycle
Vendor Selection Criteria
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About the Research Analysts
Our Solution Study Methodology
About Demand Metric
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Action Plan
Analyst Bottom Line
Table of Contents
5. 5
Primary industries that have heavily relied on CPQ systems include
Manufacturing, Transportation, Telecom, High Tech, Healthcare,
Retail, Insurance and Financial Services. Today, new solutions and
cloud technology have enabled CPQ systems to be used by
small and mid-size companies in various industries, including
general Business Services, Real Estate and Media/Publishing.
Modern CPQ systems have moved way beyond the classic model of
“Configure, Price, Quote” to offer an array of advances, including:
Product design & modeling tools to extend configuration choices
Value pricing, modeling & communication tools to enhance
pricing
ROI and TOC calculators to optimize quoting
Contract management and guided selling to improve operations
and sales performance
In short, these are not your father’s CPQ systems! We will
detail the range of standard, advanced and specialized functions and
features in the Vendor Selection Criteria section of this report.
Modern CPQ
Solutions
Quote-to-Cash
Functionality
Guided Selling
& Sales
Playbooks
ROI/TCO
Calculators
Value Pricing
Tools
Product
Modeling,
Design &
Catalogues
eSignature
Compatibility
Product
Configurator,
Pricing System
& Quoting
Contract, Order,
Proposal &
Workflow
Management
Figure 2: Modern CPQ Solutions
Configure, Price, Quote: Insights, Landscape & Vendor Analysis
11. combinations of customer category, product classification, sales
channel, deal size and volume are standard. When choosing a
pricing engine, consider not only product inventories but channel
and market needs. Make sure they can support all your sales
channels and geo-market reach.
Quoting System. Quotes should be delivered immediately,
accurately and with your company and/or channel partner brand
embedded. Beyond that, consider vendors that offer Quote-to-
Cash systems that automate each step of the process from
pricing through negotiation, approval, contract signing, invoicing
and payment receipt with tracking analytics and activity alerts.
Proposal Management. Proposal management systems manage
the proposal process from creation to customer delivery. A solid
proposal system should offer pre-built templates for fast
proposal creation with company/channel branding options. It
should manage the proposal lifecycle via workflow authorization
& approval systems and integrate with an eSignature system for
fast, accurate and legal signature-to-close.
Role in Sales Enablement
Demand Metric considers CPQ to be an integral part of Sales
Enablement as illustrated by our Sales Enablement Framework in
Figure 6. As you will see in Figure 6, CPQ products and services
are associated with Sales Operations and Sales/Account
Management, although many CPQ functions are used in
collaboration with Marketing and Marketing Operations.
Core Components
Product Configurator. Product configurator software can be as
simple as controlling your existing inventory of products and
parts for assembly or bundling or as complex as designing a new
version of a product from scratch for a specific use case through
design, modeling and 3-D visualization tools. Choose a vendor
that matches the level of complexity of your product
configuration needs.
Pricing Engine. The pricing engine automatically prices the
chosen configuration based on rules or constraints set by
operations to maintain profits and margins. Pricing by 11
Configure, Price, Quote: Insights, Landscape & Vendor Analysis
CPQ DEPLOYMENT LIFECYCLE
12. TECHNOLOGY
Senior Management
ROLES RESPONSIBILITIES PROCESSES TECHNOLOGY CONTENT METRICS
Revenue Accountability
Staffing & Channel Management
Reporting to CEO/Board
Budgeting & Planning
Performance Reviews & QA
Recruitment & Retention
CRM
Business Intelligence
MRM
Thought Leadership Blog
Webinar Presentations
Conference Keynotes
Revenue by Channel
Customer Lifetime Value, NPS
Return on Customer (ROC)
Product Management
New Product Development
Create Sales Tools/Guides
Messaging & Positioning
Product Launch
Win/Loss Analysis
Competitive Analysis
Product Mgmt. System
Enterprise Feedback/Survey
Content Management
Data Sheets, Whitepapers
Case Studies/Testimonials
Competitive Analysis
Market Share, Profitability
Brand Equity
Content Usage
Sales Operations
Build Reports & Dashboards
Monitor Sales Productivity
Data Management
Sales Forecasting
Territory Management
Sales Compensation
CRM
Proposal/CPQ
Sales Content Portal
Compensation Model
TCO/ROI Calculators
Sales Playbooks
% Quota Achieved
Sales Cost/Revenue Ratio
Incentive vs. Quota Ratio
Marketing Operations
Build Reports & Dashboards
Marketing Systems Admin
Data Management
Marketing Budgeting
Campaign Analysis
Lead Scoring & Nurturing
Buyer Personas
Customer Journey Map
Proposals, Presentations
Sales Qualified Leads
Cost Per Lead (CPL)
Cost of Acquisition (CAC)
CRM & Marketing Automation
Analytics & B.I.
Asset Mgmt. & MRM
Demand Generation
Lead Generation & Events
Branding & Social Media
Content Marketing
Advertising/Sponsorship
Lead Generation & Appointments
Tradeshows & Webinars
Marketing Automation/Email
Digital Asset Management
Event/Survey Management
How-To Guides
Research Reports
Webinars
Campaign ROI, Email Metrics
Marketing Qualified Leads
Contribution to Pipeline
Sales/Account Mgmt.
Customer Acquisition
Customer Retention
Up-sell/Cross Sell
Sales Process
Opportunity Management
Contact Management
CRM
Proposal/CPQ
Sales Content Portal
New Features/Ideas for R&D
Objection Responses
Sales Scripts
% Quota Achieved
Renewal Rate, Revenue
Opportunity Metrics
Human Resources
Staffing for Sales Enablement
Sales Training
Performance Management
Recruiting & Hiring
New Rep Onboarding
Performance & Firing
Job Descriptions
Quality Assurance/Coaching
Sales Training Manual
Avg. Time to Achieve Quota
% Unsuccessful Hires
# CV/Resume Submissions
HRIS
Learning Management System
LinkedIn & Job Websites
Customer Support
Customer Service/Support
Identify Sales Opportunities
Customer Insight/Feedback
Helpdesk (phone support)
Email Support (case/ticket)
Online Community Requests
New Features/Ideas for R&D
Support Scripts
FAQs, SLA
Avg. Time to Resolution
% Escalations to Tier 2
Net Promoter Score (NPS)
Customer Support, Twitter
CRM, Order Management
Accounting/Billing/ERP
Figure 6: Sales Enablement Framework
Configure, Price, Quote: Insights, Landscape & Vendor Analysis
13. the use of simple constraints (or pre-defined limits) on choices
to augment or replace traditional business rules.
Technology Infrastructure. Most CPQ vendors today operate
as SaaS applications, in the cloud, with support for the range of
presentation devices, including mobile devices. A few also offer
on premise options.
CRM/ERP Integration. Most CPQ vendors provide CRM
and/or ERP integration with vendors like Salesforce, SAP,
Microsoft, NetSuite and Oracle as well as small SMB players like
Sage and Selligent. Others also offer integration with
legacy/niche systems like CAD, CAM and product lifecycle
management (PLM) suites.
Key Niche Functionality
Channel Management. CPQ for channel management is about
information dissemination and control for multi-tiered sales
environments. Solid solutions include channel level product &
price configuration options, support multiple price lists &
currencies, offer multi-tier discounting and provide product
catalog and pricing information by channel and user role.
Contract and Order Management. Contract management
systems manage the contract and order process. Your contract
management solution should include a searchable contract
repository and authoring tools & templates. Choose a vendor
that offers lifecycle management from creation through
negotiation, approval, execution, auditing, reporting and renewal.
Automatic alerts embedded at key stages in the process is a plus.
eSignatures. eSignature systems enable customers to sign
proposals and contracts from anywhere on any device. Beyond
that basic functionality, eSignature vendors provide templates for
document design, authentication functions, workflow
management, reporting features, legal/industry compliance. Two
vendors dominate this space: DocuSign and Adobe EchoSign.
Most CPQ vendors integrate with one of these two vendors.
Business Rules and Constraints. Business rules drive CPQ
configuration and pricing engines. The sophistication of the
business rules has historically determined the inherent capability
of the CPQ functionality. In the drive toward ease of use and
away from legacy ERP systems, today vendors are working to
simplify the use of business rules. One option gaining ground is
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Configure, Price, Quote: Insights, Landscape & Vendor Analysis
18. Configure, Price, Quote: Insights, Landscape & Vendor Analysis
Component
Product
Configurator
PricingEngine
QuotingSystem
BusinessRules&
Constraints
Proposal&Order
Management
Channel
Management
eSignatures
ProductDesign&
Modeling
Metrics,Insights
Value-based
Pricing
Quote-to-Cash
System
GuidedSelling
Playbooks
Predictive
Analytics
SaaSInfrastructure
&CRM/ERP
Integration
Basic x x x x
Standard x x x x x x x x
Comprehensive x x x x x x x x x x
Cutting-Edge x x x x x x x x x x x x x x x
Figure 9: CPQ Vendor Selection Criteria by Functionality Tier
20. 5. Request proposals from potential vendors to gather information
on products/services. Use our CPQ System RFP Template to
create a standard proposal template for your organization.
6. After receiving RFPs from potential vendors, schedule and
attend product/service demos with 3-4 vendors to get an up-
close-and-personal view of their solutions.
7. Evaluate the 3-4 vendors at the top of your list with our CPQ
Vendor Evaluation Matrix in order to help you make your
selection.
8. Develop an implementation strategy and communication plan
to roll-out the initiative across the organization and through
your channels. Use our MarCom Plan Methodology to create
your plan.
9. Develop an education and training plan for all affected
personnel: sales, marketing, operations and channels.
10. Measure and track the progress and results of your CPQ
initiative with our CPQ Program Metrics Dashboard.
Configure, Price, Quote: Insights, Landscape & Vendor Analysis
Download
Figure 10: CPQ Program Metrics Dashboard
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